Tax hikes wrong way to go for state

Speak Out

REP. LEW EVANGELIDIS HOLDEN

A recession is a terrible thing to waste. With this economic downturn comes a tremendous opportunity for our state government to transform itself and return to the core principles of what state government is supposed to be. To me those core values are to educate our students, provide public safety, and help those who cannot help themselves, such as the disabled and the elderly. This can be done for far less than our current $27.4 billion budget.

Over the past few decades our state government has become more and more about taking care of the special interest groups that take care of Beacon Hill. The state has become a wholly owned subsidiary of those special interest groups. It is clear that we have reached the point that our budget is unaffordable and unsustainable in the long run. For years the private sector has been cutting back on employee salaries, vacation time, health benefits and pensions. At a time when layoffs in the private sector have been occurring by the hundreds of thousands, an effort on Beacon Hill to eliminate Evacuation Day and Bunker Hill Day holidays for state employees failed to pass the Legislature.

I fear that the Commonwealth is on its way to becoming another California: a state mired in bankruptcy.

Governor Patrick inherited a budget surplus exceeding $3 billion when he was elected in 2006. As a percentage of our annual budget, this was the largest surplus in the nation. After expanding dozens of programs, hiring thousands of new state employees, and addressing the economic downturn, our rainy day fund is virtually gone. The rainy day fund would be completely gone except that we immediately spent our federal stimulus money, more of which should have been saved for FY11 and FY12.

Last week I voted against the state's 2010 budget. This budget is far too tax heavy and reform light. In response to our current economic situation our state has once again resorted to massive tax hikes on the people of Massachusetts. These regressive tax hikes will hit the pocket of every working family and business trying to make ends meet. A sales tax increase of 25 percent will cost each working family $400 per year. Alcohol will now be subject to a 6.25 percent tax on top of already existing taxes paid by the store. Taxes on hotels, meals and satellite TV are also going up.

The worst time to raise taxes is during a recession. These new taxes will lead to further job losses through increased Internet sales and purchases in neighboring states, which undeniably hurts our border communities. History has shown us, as in last year's cigarette tax increase, that the revenues generated will be far less than projected. Unfortunately, the damage has been done and it will be permanent.

Some reform has taken place but much more needs to be done. We have the most expansive and expensive health care benefits system in America. When this legislation passed in 2005, we were told that uninsured emergency room visits would drop significantly and in the long run this reform would be cost-neutral. This has not been the case and we can no longer afford the hundreds of millions of dollars from our state budget to support this unaffordable program that clearly needs to be reined in. The Pacheco Law has single-handedly handcuffed every town in Massachusetts by forcing them to pay inflated costs for nearly every public project while making savings through privatization nearly impossible. While the legislature has enacted some pension reform, most of which only applies to future hires, it is obvious that we can no longer afford 80 percent tax-free pensions for retiring state employees. We must consider other options such as individual retirement accounts and 401K accounts for our state employees. Additionally, the legislature must remove all barriers that restrict municipalities and school districts from joining the state's Group Insurance Commission which provides excellent health insurance while at the same time providing significant cost savings. Finally, it is time for us to impose state wage-and- hiring freeze until this fiscal crisis passes.

Nearly all of us on Beacon Hill have issued warnings that this budget crisis is likely to last for many more years. If we don't enact real reform now we never will. It is essential that we do not miss the opportunities that are presented because a recession is a terrible thing to waste.